Inflation in October dropped by 0.2 percentage points across both the Consumer Price Index (CPI), and the Retail Price Index (RPI), settling at 5% and 5.4% respectively as supermarkets push prices down.
The 0.9% month-on-month fall in food prices - the largest October fall since 1996 - represented a strong downward pressure on CPI, as fierce supermarket price wars brought prices down.
The RPI decline was also affected by the fall in foods.
British Retail Consortium director general Stephen Robertson said: “The supermarket price war is working for shoppers.
“With consumers’ budgets under severe pressure, competition between retailers has intensified. Supermarkets are cutting their already thin margins even further to hold down shop prices in the face of rising energy and property costs.
“Inflation is not coming from shops but from utility, fuel and insurance bills. The retail sector is doing its bit to support households.
“We need the Chancellor to hold down the costs he is responsible for by scrapping the fuel duty increases planned for 2012 and restricting business rates rises.”
Figures published last week by the British Retail Consortium showed supermarket price wars pulled its Shop Price Index down by 0.6 percentage points.
Clothing and footwear created the largest upward pressure on CPI and RPI in October, due to a record 0.8% month-on-month price increase in October.
Women’s outerwear prices have risen more sharply this year than last. Steep price rises in October for certain types of women’s casual jackets and trousers combined with price increases across menswear produced a big upwards effect.
A rise in gas and electricity bills also pushed inflation up.